Why Wait for Your Money on the Sale of Your Business? Canada 150 Recommendation #146

Wednesday’s= Succession

When a business owner sells their business, there is a temptation to take some of the debt back from the purchaser. This happens when the buyer does not have all of the money that the seller wants. The compromise is that the seller gets the money they are looking for — but they have to wait for it. The new owners agree to pay a certain amount each year for five years, this is called a vendor take back. Or the buyers agree to pay a percentage of the earnings for the next few years to the seller.

Either way, don’t do this if you need the money. Your chances of getting the money if you wait for it are much much less. In addition, instead of walking away from this business, you are still tied to the business — because they need to make money to send you money.

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